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clearing: Definition and Much More from Answers.com

  • ️Wed Jul 01 2015

The procedure by which an organization acts as an intermediary and assumes the role of a buyer and seller for transactions in order to reconcile orders between transacting parties.

Investopedia Says:
Clearing is necessary for the matching of all buy and sell orders in the market. It provides smoother and more efficient markets, as parties can make transfers to the clearing corporation, rather than to each individual party with whom they have transacted.

Related Links:
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Wikipedia: clearing (finance)

In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled (see settlement). Clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction.

In its widest sense clearing involves the management of post-trading, pre-settlement credit exposures, to ensure that trades are settled in accordance with market rules, even if a buyer or seller should become insolvent prior to settlement.

Processes included in clearing are reporting/monitoring, risk margining, netting of trades to single positions, tax handling, and failure handling.

Central counterparty

Clearing generally involves the use of a well capitalised financial institution known as a central counterparty (CCP). The CCP becomes a party to every trade, acting as buyer to market participant sellers, and seller to market participant buyers. In respect of unsettled trades, market participants therefore bear the standardised credit risk of the CCP, and not that of each other in a decentralised market.

In the United States, interbank clearing is done through the Automated Clearing House (ACH). Its rules and regulations are set by NACHA-The Electronic Payments Association, formerly the National Automated Clearing House Association, and the Federal Reserve. The ACH network acts as central clearing facility for all Electronic Funds Transfer (EFT) transactions. Interbank clearing of paper checks is done by correspondent banks and the Federal Reserve; they are ultimately settled between the 12 Federal Reserve Banks through the Interdistrict Settlement Fund.

Netting

The CCP can net its daily purchases and sales in like securities since each market participant has only one counterparty to its trades. Such netting is widely identified as the key benefit offered by the use of a CCP.

See also

External links

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Dansk (Danish)
n. - rydning, rensning

idioms:

  • clearing bank    clearing bank
  • clearing house    clearingkontor, afregningskontor

Nederlands (Dutch)
verrekening, open plek in bos

Français (French)
n. - clairière, enlèvement, déblaiement, abattage, défrichage, suppression, (Fin) compensation

idioms:

  • clearing bank    (GB, Fin) banque affiliée à une chambre de compensation
  • clearing house    (Fin) chambre de compensation, (Admin) bureau central

Deutsch (German)
n. - Entleerung, Lichtung

idioms:

  • clearing bank    (econ.) Clearingbank, Geschäftsbank
  • clearing house    (econ.) Clearingstelle, Abrechnungsstelle, Verrechnungskasse

Ελληνική (Greek)
n. - (ξε)καθάρισμα, (οικον.) εκκαθάριση, συμψηφισμός (επιταγών κ.λπ.), ξέφωτο ή χέρσα έκταση, ξαστέρωμα, διαλεύκανση, εκτελωνισμός

idioms:

  • clearing bank    τράπεζα συμψηφισμού
  • clearing house    (οικον.) γραφείο συμψηφισμού επιταγών

Italiano (Italian)
sgombero

idioms:

  • clearing bank    banca che aderisce alla stanza di compensazione
  • clearing house    stanza di compensazione

Português (Portuguese)
n. - esclarecimento (m), compensação (f) de cheques

idioms:

  • clearing bank    um dos bancos britânicos que utiliza escritório central para negociar com outros
  • clearing house    carteira (f) de compensação

Русский (Russian)
поляна, клиринг

idioms:

  • clearing bank    клиринговый банк
  • clearing house    расчетная палата

Español (Spanish)
n. - aclaramiento, escampada, compensación, liquidación, despeje

idioms:

  • clearing bank    banco comercial
  • clearing house    cámara de compensación, agencia distribuidora, centro de intercambio de información

Svenska (Swedish)
n. - klarnande, klargörande, förklaring, fritagande, röjning, hygge, glänta, clearing

中文（简体） (Chinese (Simplified))
清除, 空地, 扫除, 票据交换

idioms:

  • clearing bank    清算银行
  • clearing house    票据交换所, 情报交换所

中文（繁體） (Chinese (Traditional))
n. - 清除, 空地, 掃除, 票據交換

idioms:

  • clearing bank    清算銀行
  • clearing house    票據交換所, 情報交換所

한국어 (Korean)
n. - 청소, 개간지, 어음교환

日本語 (Japanese)
n. - 清掃, 除去, 開拓地, 空き地, 掃除

idioms:

  • clearing bank    手形交換組合銀行
  • clearing house    クリアリングハウス

العربيه (Arabic)
‏(الاسم) فسحه في غابه‏

עברית (Hebrew)
n. - ‮קרחת יער, סילוקין, מברא‬

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